Credit Cards

3 Things to Consider When Applying for a Retail Credit Card

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Most big chain stores offer a retail credit card with a loyalty rewards program. Some of these cards can be great tools, but there are several things you need to watch out for.

Here are 3 things to consider before you apply for a retail credit card

  1. Where it can be used

Often the biggest drawback of a retail credit card is that it can only be used at stores associated with the retail brand. This makes them essentially useless unless you shop frequently at a specific store. Depending on the rewards program, it could take years and thousands of dollars to see a single benefit.

You should generally avoid cards that can only be used at one retail chain. There are only three exceptions:

  • If you shop religiously at the chain in question (you’ll probably have to be spending $100+ per month to earn rewards at a decent pace)
  • If most purchases from the chain are large items, such as furniture or tech items
  • Some rewards programs are very generous or come with additional perks like free shipping with no minimum
  1. What they’re offering you

Is there a rewards points program? A percentage discount on orders over a certain amount? A sign up bonus? Access to special sales? Birthday gifts? How do those rewards stack up against your current credit cards?

Analyze the rewards program in detail, and be ruthless. Having too many credit cards can ruin your credit, so it’s essential to choose cards that maximize your returns.

  1. What the interest rate is

Regular credit cards have notoriously high interest rates. Retail credit cards are worse. Interest rates can be as high as 25% on regular purchases and 29% on cash advances (if cash advances are even allowed).

Most retail credit cards also have an extensive structure of fees, including late fees and over limit fees. These routinely cost $25-30, and should always be noted.

If you use your credit card responsibly these high fees and rates might be worthwhile, but you need to be careful about them. Make sure you at least read the entire information package and understand what you’re getting yourself into.

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